Bonus Depreciation Financing

Bonus depreciation and Section 179 are often mentioned in the same breath, but they operate differently and serve different situations. The key distinction most dental practice owners care about: bonus depreciation has no dollar cap per year. A solo practitioner acquiring a single $90,000 scanner and a large group practice investing $2 million across new locations both use the same provision. For practices making large capital investments, or for situations where Section 179 limits have already been reached, bonus depreciation fills the gap and can accelerate the deduction on equipment financed this calendar year.

The structure works this way: you finance a qualifying asset, place it in service at your practice, and claim an accelerated percentage of the cost as a deduction in that first year. The percentage has changed over time as Congress has adjusted the provision, so confirming the current rate with your CPA before purchasing is important. The deduction reduces taxable income, which reduces the net cost of owning and operating the equipment, even as your actual cash outflow is spread over your loan or lease term.

Bonus Depreciation and Financing Together

The financing structure you choose matters for bonus depreciation, just as it does for Section 179. Standard equipment loans qualify because you own the asset. $1 buyout leases are generally treated as purchases and also qualify. FMV (operating) leases are more complex; because you don't own the asset and may return it, the asset is typically on the lessor's books for depreciation purposes, not yours.

Paired with financing, bonus depreciation creates an asymmetry that benefits cash flow. In year one, your tax savings from the accelerated deduction can significantly exceed the cash you've actually paid toward the loan. If you finance $200,000 in equipment upgrades, your first-year cash payment might be $40,000 to $50,000 in loan installments, while the tax deduction on the full cost at your practice's marginal rate could approach or exceed that amount. The equipment is working for you clinically and rewarding you on the return side before the loan is anywhere near paid off.

• No dollar cap, unlike Section 179's annual limit
• Applies for the tax year when the equipment enters service
• Available on both new and qualifying used equipment
• Works with loans and $1 buyout lease structures
• Percentage may change year to year; confirm with CPA

Why Dental Practices Prioritize Bonus Depreciation

Dental practices are capital-intensive businesses. A new operatory requires chairs, delivery units, lighting, cabinetry, and potentially imaging equipment. A technology refresh to digital workflows adds scanners, software, and mills. These aren't small numbers; full buildouts regularly run $150,000 to $400,000 per operatory, and multi-operatory expansions push well above that. At those investment levels, the tax implications of how you depreciate the equipment are material.

Practices building out a new location or adding operatories to an existing space often combine financing with a specific tax plan that uses bonus depreciation to front-load deductions in the launch year, when taxable income may be lower anyway due to buildout costs and ramp-up. This timing creates an efficient deduction profile: high deductions early, growing production income following. Startup practices in their first full year of operation sometimes benefit especially from this dynamic.

Larger organizations, including dental service organizations adding multiple locations in a single year, routinely use bonus depreciation precisely because there's no cap. Each location's equipment qualifies separately, and the aggregate deduction can be substantial. We work with both individual practice owners and organizational finance teams to structure purchases that align with their depreciation strategy.

Getting Financing in Place Before Year-End

To take the deduction in a given tax year, the equipment must be placed in service, meaning installed and ready to use clinically, by December 31. Financing approval, vendor ordering, delivery, and installation all need to sequence before that date. For complex equipment like CBCT units with radiation room requirements or central vacuum and compressor systems that require plumbing and electrical work, the installation timeline is not trivial.

For application-only transactions under approximately $400,000, approval can come within 24 to 48 hours and funding within one to two weeks. Starting the financing process in September or October gives you the most comfortable runway to close, receive equipment, and get it operational before year-end. Waiting until December creates risk that a manufacturing backlog, shipping delay, or contractor schedule disrupts your timeline.

If your transaction is above $400,000, lenders require financial statements and additional documentation, which extends the review period. For those deals, starting in August or September is advisable if December placement is the goal. A quick application-only transaction below the threshold can be arranged on a faster timeline if needed.

Finance Your Equipment Before Year-End

If bonus depreciation is part of your year-end planning, tell us what you're acquiring, the approximate cost, and your target placement date. We'll match you to lenders who can close on your timeline and confirm the structure is eligible for first-year deduction treatment. Your CPA closes the loop on the tax side.